South Korean Won Weakens on Fed Tone

The South Korean won fell to around 1,394 per dollar on Tuesday, reversing gains in the previous session as markets reassessed US monetary policy signals. Policymakers at the recent Fed speeches emphasized that further rate cuts will be gradual and dependent on incoming data, dampening hopes for aggressive easing and leaving the won on the defensive against the greenback. Domestically, the won also faced pressure from softer producer prices, slipping by 0.1% in August from the previous month while rising only 0.6% year-on-year, fueling expectations of a cautious stance from the Bank of Korea, even as the government announced fresh measures to support exports in a bid to shore up the external balance. The mixed domestic backdrop underscored that policy support may not fully offset global headwinds, reinforcing weakness in the currency. Looking ahead, traders await today’s consumer and business confidence data in Korea and the US PCE price index due Friday for fresh policy cues.